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HomeMy WebLinkAboutAffordable Housing Board - Minutes - 05/02/1996APPROVED JUL 1 1 1996 AFFORDABLE HOUSING BOARD MEETING MINUTES May 2, 1996 Mary Cosgrove, Chairperson (work - 667-3232; home - 493-9164) Gina Janett, Council Liaison The meeting of the Affordable Housing Board began at 4:05 p.m. in the Community Planning Conference Room, 281 North College Avenue, Fort Collins, Colorado. Board members present were Chairperson Mary Cosgrove, Ann Sanders, Tom Sibbald, and Bob Browning. Susan Nabors and Sue Wagner arrived later in the meeting. Staff members present were Ken Waido, Dickson Robin, and Alan Krcmarik arrived later in the meeting. Don Aldridge, Administrator of the Larimer Home Improvement Program, was present. Betty Maloney, Lou Stitzel, Denise Case, with the Resources Assistance Center, and Larry Wahl were present as observers. A quorum was not initially reached, so the Board members present chose to alter the meeting agenda, holding items that required a vote until later in the meeting. Public comment was solicited. Ms. Stitzel suggested in reference to the Affordable Housing Index, that when affordability is referred to, it is determined in relationship to the area median income. This will result in a more stable layout and address the spread of the housing continuum of supply. She believes that if people, particularly the media, can be trained to refer to where a project is, that will result in more of a consistency. Also, Ms. Stitzel stated it is important that the Larimer County Consortium, in doing statistics, use the same procedure. This will develop a better understanding of what affordability really means. Ms. Stitzel also addressed the issue of the new fees. She relayed that she had spoken to Council and told them it is fine to do an adjustment on a sliding scale rebate, but that still means we are only getting' to 1/3 support, and for affordable housing that means an increase of costs, depending on the particular item, will result from between $2,500 to $5,000 per unit. She wanted to share this information with the Board and feels that it is a problem for the Affordable Housing Board. Mr. Robin stated that Staff would attempt to tie the percentage of AMI to various costs of housing in the future. Mr. Sibbald questioned the status of the Affordable Housing Information Survey. Mr. Waido noted that Lisa Schwartzberg will be on the Board's agenda next month to give a further update. Mr. Sibbald stated that an analysis needs to be done because if direct subsidy is undertaken, CDBG, HOME, etcetera, needs guidance. He believes the survey should be elevated in priority, and the Board should monitor its progress closely. Mr. Waido stated one of the things discussed at the Board's retreat was the rebate program. Mr. Waido requested the Board discuss the matter and eventually send a memo to Council requesting more money from the '97 budget to be put into the rebate program. He added that right now on an annual basis only $133,000 is earmarked for the rebate program. This is not a significant amount of money now, and more problems will result if that amount of money remains the same and the fees go up. In addition, those that are given rebates are only receiving 30 to 50 percent of their fees back. Mr. Waido noted that the Board has expressed a great deal of criticism toward the rebate program in the past, AHB Minutes May 2, 1996 Page 2 but even less stimulation of units will be had if the fees go up. Mr. Waido added that this issue should be addressed at this meeting due to Council's consideration of the budget on May 21 st. Mr. Browning stated he got the impression from the retreat that Staff would be looking into requesting more money. Mr. Waido replied that Staff could look into the issue as part of the budget process, but Board support would be a great help in the request. Mr. Sibbald distributed a memorandum to the Board. Mr. Sibbald stated he was very disappointed in the Affordable Housing Task Force and the Board for not getting more vocal about the proposed fee increases. He pointed out that fees and taxes on the average house have risen 52 percent over the last five years. The median household income has only gone up 27 percent. The only two items that exceed the fee increases over the last five years is the price of the average home sold, which is supply and demand driven. However, capital spending has remained the same. In conclusion, Mr. Sibbald feels the City has taken in more money than ever before, and they are spending less on capital improvements, and they are adding more costs on top of home building costs in the form of fees to spend on capital improvements. This information was outlined further in his memo. Ms. Cosgrove stated that she could attend the May 21 st meeting, and if a consensus could be reach, she could present this statement to the Council. The decision was made to next hear the update on the Provincetowne SID Property Sale. Mr. Waido stated that the developers had met for a conceptual review. The next step will be for them to conduct a neighborhood meeting which is scheduled for May 13th. After the neighborhood meeting, the developers will formally submit their plan to the City for approval. The developers' intent is to do an entire preliminary plan for the entire property and then submit the final phases of the project. Ms. Cosgrove questioned whether anything was known concerning the true affordablility of any of the construction in terms of multifamily or single family. Mr. Waido replied that the project is truly a mix of housing types. He added that the contract with the developer specified that certificates of occupancy will not be issued unless at least 30 percent of the units are affordable. Mr. Sibbald questioned whether discussion had taken place concerning whether the for - sale units were going to stay permanently affordable. Mr. Waido replied that he was uncertain of the facts but knows the issue has been discussed. He added that he could get Mr. Sibbald a copy of the contract if he would like to see it. Mr. Sibbald stated that he believes the Affordable Housing Board needs to maintain some sort of influence on that project going forward. He suggested Staff involve the Board in terms of deed restrictions which would ensure permanent affordablility for some time. Mr. Aldridge addressed the Board concerning the Larimer Home Improvement Program request for matching funds. The Board received a handout on the status of last year's funds. Mr. Aldridge asked the Board if they had any questions on those funds. Mr. Sibbald stated that he was somewhat surprised at the high amounts being loaned out. He questioned why the project would take on a subordinate position on a rehabilitation AHB Minutes • • May 2, 1996 Page 3 when it appears as though equity exists to allow refinancing of the first mortgage to obtain the necessary loan. Mr. Aldridge replied that if the equity is in the home and the second position is secure, it is as easy for the homeowner to take the second position as to completely refinance their mortgage. Mr. Sibbald replied that the homeowner should have to borrow the largest portion of their loan against the first mortgage, and then the LHIP would not have to take on such a large subordinate position. Ms. Nabors questioned what the interest rate of the program was. Mr. Aldridge replied that it is a varying interest rate of 1 to 5 percent, and that rate is ranked based on the financial situation of the applicant. In response to questioning, Mr. Aldridge stated that LHIP would loan up to 80 percent of the equity in the home. Mr. Aldridge stated that his belief was the multi jurisdictional board set up the requirement that the homeowners fit the income guidelines as established by HUD. The owners could actually have equity in the home, and that would not be used against them in qualifying. It did, however, change their ranking if they had substantial equity in the home, in that they could possibly be ranked below an individual with the same financial position but with less equity. Mr. Sibbald stated that he believes the LHIP is supplanting the private sector, and he does not feel that was the intent of the program. He feels that once an applicant has exhausted the possibilities of obtaining commercial financing, then it is appropriate for the LHIP to step in for assistance. Ms. Nabors questioned how many more requests are received than loans that are underwritten. Mr. Aldridge replied that at this time there are substantially more loans than requests. The holdup has been in obtaining bids from contractors. Three subcontractor bids must be obtained. Ms. Nabors then questioned how many more requests are received than funds. Mr. Aldridge stated he did not have an answer for that. Ms. Nabors questioned what type of home improvements are being undertaken. Mr. Aldridge stated that it varied. Examples were foundation repairs, heating systems, bathroom/sewer rework, interior remodeling, roofs, and floor coverings. Ms. Nabors asked if the majority of the projects are for needs to upgrade the safe living conditions. Mr. Aldridge replied that the majority of the items are housing quality standard upgrades, but refusals are not given if minor cosmetic changes are requested after an upgrade is done. In response to questioning, Mr. Aldridge stated that no match is required for the funding. Also the program is 100 percent loan with no grants. He also stated that a very small percentage of the loans have had collection problems. He estimated the percentage to be approximately 2 or 3 percent. Ms. Sanders questioned the qualification requirements. Mr. Aldridge stated that it is basically considerably easier than qualifying for conventional loans. No debt to equity ratio is required. Applicants do have to have housing quality standard problems in the home and fit the income guidelines. The program also runs a credit report on the applicants, notify the employer and checks one prior years tax return for income AHB Minutes May 2, 1996 Page 4 verification. Ms. Sanders stated that when she had first seen the project two years ago, she had a problem with it, and she still has a problem with it, in that it needs to be fine tuned. She is unsure if it is administered properly. Ms. Nabors stated that philosophically she is in favor of the program, but it seems as though some of the loan amounts are very substantial, and she feels that if sufficient equity exists, at least a part of that should be financed by a traditional lender. Mr. Sibbald questioned when the City funds were needed by the LHIP. Mr. Aldridge said by the first of June or July. Mr. Sibbald stated that he felt the Board was inclined to agree to fund the program but is personally surprised at the sums being loaned out of the program. He envisioned loans in the neighborhood of $3,000 to $6,000 and never envisioned loans in the neighborhood of $15,000 being common with the program. Mr. Sibbald added that he would like Mr. Aldridge to return to the LHIP board with the suggestion that applicants should attempt to obtain commercial lending first, and failing that, the LHIP may approve lending. Mr. Browning added that perhaps some sort of consideration should be given toward ensuring permanent affordability. Ms. Nabors suggested that perhaps a combination of commercial and LHIP loans could be utilized. Ms. Sanders suggested that perhaps the guidelines as to how the money is being used needs to be examined. Ms. Nabors asked if the program receives feedback from the homeowners. Mr. Aldridge replied that a reporting system is in place that in which after the loans are completed, the homeowners fill out their thoughts on the program. As a result of that reporting system, the question has arisen of whether or not this program should be opened up to rental property as well. Mr. Aldridge added that the LHIP board feels the owner -occupied home applicants should be exhausted first. Ms. Cosgrove pointed out that Aurora has a rental rehabilitation program, and if the day comes about where not very many homeowner applications are being brought forward, perhaps discussion with the City of Aurora could take place on their rental program. Mr. Aldridge agreed to return for the June meeting. Moved by Ms. Nabors, seconded by Ms. Wagner. To approve the April 4th, 1996, minutes as written. Mr. Sibbald noted that a letter was supposed to have been produced and sent to Council regarding fees as noted on page 6 of the April 4th minutes, and that letter was not produced. Motion approved unanimously. The next item on the agenda was the follow-up discussion to the Board retreat of April 25th. Ms. Cosgrove expressed her disappointment in not being able to attend the retreat and asked that the members present at the retreat give an update of their perceptions. AHB Minutes • May 2, 1996 Page 5 Ms. Nabors mentioned one item that was discussed was the completion of a reasonable assessment of housing stock and related information. A number of entities paid for the assessment a long time ago, and it hasn't been produced by the County yet. Mr. Browning noted that perhaps assistance could be obtained from CSU or a senior project for a hands-on accounting of what information is available. He also noted that much discussion was had on the lack of information that can be obtained through the Assessor's records. Mr. Sibbald stated that it would not cost too much to hire the consultant BBC to do actual market research. Mr. Waido reiterated that Lisa Schwartzberg from Larimer County would be coming to the next Board meeting to discuss the situation further. Mr. Browning said that further discussion was held concerning obtaining information from the mom -and -pop -type rental set ups. Discussion was further held that a significant amount of capacity is held in these private -owned rentals, and that information would significantly skew other data. Mr. Browning also stated that some discussion was held concerning integrating some of the CSU locator data at least as a start to where some of the college kids are living in an effort to locate private -owned rentals. Mr. Sibbald stated that the older units in the inventory are going to be more inclined to be affordable. Therefore, if an index could be created of housing units that are 25 years or older, that will go a long way toward being able to get information on the rental aspect. Ms. Sanders noted that realtors utilize the MLS system in an effort to determine whether a house was sold to an investor or not. She suggested that the CSU real estate department must be linked into the MLS system, and once the information is received, investment properties could be located based on the percentage put down when purchasing the house. Mr. Sibbald stated that the assessment cannot be undertaken simply in the context of Fort Collins because a commuter society in Berthoud and Loveland, at cetera, still exists. Mr. Sibbald suggested that the Board put a recommendation forward that Staff be directed to contact the former consultant or another consultant to determine what it would require to get a good base line of information and whether that effort should be turned over to the County for monitoring and the City remove themselves from the process. Ms. Cosgrove suggested addressing the issue when the County comes to the Board meeting. Mr. Sibbald suggested perhaps a memo should be written to the County, so they can come prepared to address the issue. Mr. Waido reminded the Board that if they had any comments concerning the '97 budget, those needed to be made by the 21 st of May. He reiterated that the rebate program would be an item for the'97 budget. Mr. Browning added that fee increases were also discussed at the retreat, and he feels more money should be requested to increase the size of the rebate to make up for some of the fee increases. Mr. Waido stated that the only other item he had noted from discussions at the retreat was the dispersal altemativesfinclusionary zoning. Mr. Browning stated that Mr. Kavanagh had been reasonably against inclusionary zoning, and discussions had taken place both for AHB Minutes May 2, 1996 Page 6 and against. He believes most of the Board members present were against. However, concern was also expressed as to how the projects would be developed without the dispersal alternatives. Moved by Mr. Sibbald, seconded by Mr. Browning: That the Board recommend to Council for consideration in the 1997 budget two affordable housing items; one, an increase in the amount of the fee rebates eligible equal to the proportionate amount of the fee increases; two, a sum is budgeted of not greater than $20,000 out of the trust fund to complete the Affordable Housing Information Survey to obtain a reasonable demand analysis with which to target future subsidy allocation. Mr. Waido stated that he was hearing an urgency for the completion of the study. He suggested utilizing $20,000 out of this year's money rather than waiting until '97 funds become available in January. Mr. Sibbald stated that he is requesting the Chair, as part of the directive memo to Council, to state that the Board is recommending that Council appropriate 1997 money. It is also the opinion of the Board that it is better appropriated in 1996, but failing that, absolutely in 1997. Ms. Cosgrove asked if sufficient rebate money exists to get through this year. Mr. Robin stated that sufficient money does exist to cover this year's rebates. Motion passed unanimously. Mr. Robin addressed the Board concerning the update on the housing dispersal alternatives. He stated that he was asked to develop a discussion paper on housing dispersal mechanisms for presentation to Council's Growth Management Committee. He was given extremely limited time to produce that paper, and as a result, the Board was unable to receive a copy prior to its presentation. Mr. Robin noted that one of the items he was directed to discuss was inclusionary zoning. Another item was a land -banking program. The third item was location guidelines of affordable housing following the Eugene, Oregon project that was previously discussed. The final item was an excise tax for affordable housing, creating funding that could be allocated by the City to encourage dispersal of affordable housing. Essentially no action was taken upon presentation of the issue to the Growth Management Committee other than Staff was directed to perform significantly more study on the issue, in particular, what is the supply and what is the demand. The Committee also did not want to dismiss inclusionary zoning and wanted further study done on that item. The Committee also requested a study performed on the link between job creation to supply and demand. Mr. Robin stated that Staff recommended following the Eugene, Oregon example of developing location guidelines in terms of dispersing housing equally throughout the city and taking some existing financial dollars and applying them to achieve those goals in providing affordable housing throughout the community. Ms. Nabors requested that the Board receive a copy of Mr. Robin's report and a copy of the minutes from the Committee meeting. Mr. Robin stated that he would get those documents to the Board. AHB Minutes • May 2, 1996 Page 7 Mr. Sibbald stated that he believed the Board needed to be very resistive to the concept of inclusionary zoning. He believes that any type of tax or inhibitor to the production side of building hurts the ultimate solution. Mr. Browning pointed out that one of the concerns that came up in the retreat discussion on inclusionary zoning was that it would definitely reduce growth. Mr. Sibbald agreed stating that inclusionary zoning is more of a growth management control mechanism than an affordable housing mechanism. In closing, Mr. Robin stated that he had passed on the minutes from the last Affordable Housing Meeting in which a motion was made concerning inclusionary zoning. Mr. Krcmarik addressed the Board with an update on the cost of services study. He noted that Council did pass all five of the impact fees on the first reading with a vote of five to two. Council did take the option recommended by the Board on implementing the fees on a sliding scale. Second reading will be held on May 21st, and a Planning and Zoning hearing will be held on the 20th of May. The only issue that has changed since the first reading was the fire department fee did not include the fire trucks in the cost, therefore, a slight increase has occurred in that fee. In response to questioning, Mr. Krcmark stated that park land fees could be implemented on a sliding scale. Street oversizing is not based on household size but is based on trip generation. Therefore, the engineering department does not believe the sliding scale will work for them. Water and sewer examined their method of costing service, and they believe they are just delivering a basic level of service. Mr. Sibbald asked if park land fees would then be included in the second reading. Mr. Krcmarik stated that it would not be part of the second reading but will be part of the revisions to the park land fee that is coming up in June. Mr. Sibbald noted that when the transportation maintenance fee analysis was undertaken the determination was made that certain types of housing generated less trips than other types of housing, and that was the reason different types of categories of maintenance fees were set up. Therefore, Mr. Sibbald concluded that perhaps the street oversizing fee should be connected to the TMF formula rather than the size of the house. He noted that Council had rejected the fee not the method. Some further discussion was held concerning the memorandum that Mr. Sibbald gave to the Board. Mr. Waido addressed the Board concerning the City Plan - Structure Plan. He stated that Council has directed Staff to solicit any concerns that the City boards may have on the City Structure Plan. Mr. Waido explained the process and items contained in the City Structure Plan and showed the Board maps which portray possible structure options. Concern was expressed over the speed with which the City Plan is being developed. Mr. Sibbald suggested that the Board members be involved in the City Plan project and suggested they attend some of the City Plan Advisory Committee meetings to provide input into the process. Ms. Sanders moved adjournment. With no objections, the meeting adjourned at 6:30 p.m.